Rescap eyes $600m asset sale

By Paul Muolo in Washington DC
09-May-2008
GMAC-RFC's parent group Residential Capital Corporation says it hopes to sell $600 million worth of assets by June 30 and is considering the auction of European MBS held on its balance sheet.

In a new filing with the Securities and Exchange Commission the company says that it is "highly leveraged relative to our cash flow".

In a statement it says: "There is a significant risk that we will not be able to meet our debt service obligations, be unable to meet certain financial covenants in our credit facilities, and be in a negative liquidity position in June 2008."

ResCap is renegotiating its bank loans and hopes to receive a $3.5bn senior secured credit facility from its parent company, GMAC. Hedge fund giant Cerberus Capital owns a controlling stake in GMAC.

Among the other assets that ResCap may sell are retained interest in MBS, time share receivables, and what it calls "platforms that are unrelated to our core mortgage franchise business."

The company cautions that the amount of money it may need could be "greater than anticipated as a result of additional factors and events" such as interest rate fluctuations and margin calls.